REAL PEOPLE, REAL ISSUES

May 21, 2008

Cell phone users may get break on fees

Cell phone companies routinely charge customers
$175 or more for quitting their service early. Under a proposal to the Federal Communications Commission, the wireless industry would give consumers the
opportunity to cancel service without any penalty for up to 30 days after they
sign a cell phone contract or until 10 days after they receive their first
bill. The proposal also would cap such fees and reduce them month by month over
the course of a contract based on how long customers have left, according to
people familiar with the offer speaking on condition of anonymity because the
FCC has not accepted it. The plan would not In exchange for the government's
approval, the agreement would let cell phone ompanies off the hook in state
courts where they are being sued for billions of dollars by angry
customers. If approved by the FCC, the proposal also would take away the
authority of states to regulate the charges, known as early termination fees.
The nation's No. 2 wireless company, Verizon
Wireless, offered the proposal to the FCC for its review after high-level
meetings with senior FCC officials. It did so in consultation with other
leading wireless companies, whose executives indicated they would not oppose
its provisions, people familiar with the offer told the AP. The FCC declined to
comment. Consumers who have paid such fees describe them as exorbitant.
"It's ridiculous," said Ric Causey of Allen, Texas, who paid $600 in
termination fees to Sprint on contracts for three cell
phones after he canceled service because of what he said was poor reception
around Dallas. "I understand the fine print, but I ended up paying $200
per phone just to switch service," Causey said. He complained to
executives to no avail. "I never got any satisfaction," he said.
"I figured I'd deal with it later, but I never got reimbursed."
Causey, a freelance video producer, said he never imagined refusing to pay the
fees out of fear it would hurt his credit rating. Wireless companies said the
cancellation fees are necessary to recover the cost of cell phones, which they
subsidize under long-term service contracts, and to defray their costs for
signing up new customers. Consumer groups said the fees are unreasonable and
intended to discourage customers from switching among providers. The expensive
fees have led to class-action lawsuits in several states and legislative
proposals on Capitol
Hill and in state
legislatures around the country. The industry's proposal would link
cancellation fees to actual costs incurred by a wireless company, and it would
require companies to prorate any fees over the course of the contract. Verizon
Wireless currently reduces such fees but never below $60. Other major
providers, including AT&T Inc., have announced plans to prorate fees. The
proposal also would prohibit a wireless company from imposing a termination fee
on customers who change terms of their contract or end one contract period and
begin another. SOURCE: AP NEWSBREAK

Comments

Cell phone users may get break on fees

Cell phone companies routinely charge customers
$175 or more for quitting their service early. Under a proposal to the Federal Communications Commission, the wireless industry would give consumers the
opportunity to cancel service without any penalty for up to 30 days after they
sign a cell phone contract or until 10 days after they receive their first
bill. The proposal also would cap such fees and reduce them month by month over
the course of a contract based on how long customers have left, according to
people familiar with the offer speaking on condition of anonymity because the
FCC has not accepted it. The plan would not In exchange for the government's
approval, the agreement would let cell phone ompanies off the hook in state
courts where they are being sued for billions of dollars by angry
customers. If approved by the FCC, the proposal also would take away the
authority of states to regulate the charges, known as early termination fees.
The nation's No. 2 wireless company, Verizon
Wireless, offered the proposal to the FCC for its review after high-level
meetings with senior FCC officials. It did so in consultation with other
leading wireless companies, whose executives indicated they would not oppose
its provisions, people familiar with the offer told the AP. The FCC declined to
comment. Consumers who have paid such fees describe them as exorbitant.
"It's ridiculous," said Ric Causey of Allen, Texas, who paid $600 in
termination fees to Sprint on contracts for three cell
phones after he canceled service because of what he said was poor reception
around Dallas. "I understand the fine print, but I ended up paying $200
per phone just to switch service," Causey said. He complained to
executives to no avail. "I never got any satisfaction," he said.
"I figured I'd deal with it later, but I never got reimbursed."
Causey, a freelance video producer, said he never imagined refusing to pay the
fees out of fear it would hurt his credit rating. Wireless companies said the
cancellation fees are necessary to recover the cost of cell phones, which they
subsidize under long-term service contracts, and to defray their costs for
signing up new customers. Consumer groups said the fees are unreasonable and
intended to discourage customers from switching among providers. The expensive
fees have led to class-action lawsuits in several states and legislative
proposals on Capitol
Hill and in state
legislatures around the country. The industry's proposal would link
cancellation fees to actual costs incurred by a wireless company, and it would
require companies to prorate any fees over the course of the contract. Verizon
Wireless currently reduces such fees but never below $60. Other major
providers, including AT&T Inc., have announced plans to prorate fees. The
proposal also would prohibit a wireless company from imposing a termination fee
on customers who change terms of their contract or end one contract period and
begin another. SOURCE: AP NEWSBREAK

September 2012

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